Naira redesign: Politicians dump Naira at forex market
Sopuruchi Onwuka
Huge volumes of apparently stashed away for election purposes are finding their way to the parallel foreign exchange market on fears of being tracked if they make their ways to the banks.
The rush to mop up foreign exchange at the informal windows mainly by politicians, our correspondents gathered helped in mounting immense pressure the Naira, forcing the Nigerian local currency to sink all time lows at all exchange windows.
Market sources confirmed to our field reporters that mainly informal traders that have links with notable politicians in the country have been hauling in huge volumes of cash Naira in exchange for few dollars, euros and pound sterling.
Other second tier international currencies including the Japanese yen, China’s yuan, Canadian dollar and Australian dollar are also in high demand at huge Naira prices. South African rand is also said to be one of the highly demanded currencies in the parallel markets.
The rush for all manner of foreign currencies came as the Central Bank of Nigeria announced plans to change the face and design of the local currency to partly contain mop up from banks as election campaigns gather steam.
The central bank has since tightened the nation’s monetary policy to support weakening economic growth and counter inflation. The apex bank explained that the amount of naira outside the banking system was making policy less effective. And President Muhammadu Buhari has supported policies of the apex bank whose head, Godwin Emefiele, was appointed by the ruling party and has been taking unilateral monetary policy decisions including the redesign of the Naira.
In combating cash mop up from the money market the Economic and Financial Crimes Commission (EFCC) had recently raided exchange bureaus in Abuja, Lagos and Kano and made some arrests. The agency however did not disclose the identities of those arrested.
The EFCC had earlier accused currency speculators and hoarders of being responsible for artificially weakening the naira.
Banking sources also confirmed that politicians have been making calls for huge cash withdrawals from many branches, triggering the return of bullion vans on the roads. Some of the bullion vans loaded at some of the branches of the banks, accordthe ing to service providers in the financial services sector, are destinationed to family homes of politicians under strictly confidential arrangements.
The huge cash volumes are now finding their way to the forex market at give away prices, with the dollar selling for record N860 per dollar on the black market weekend.
The parallel market rate, banking sources said, has inflicted immense destruction impact on the official windows where the dollar remains at N450.
The black market gained strength after surge in demand as the Central Bank issues less volume of dollars to buyers in the official windows and buyers turn to the informal market to meet their demand.
Most of the banks have issued notices to customers, informing them of the plans to begin rationing foreign exchange among applicants in view of forex illiquidity in the country.
The forex crisis also triggered suspension of international business services including airlines operating flights into the country.
Emirates, the UAE carrier, declared weekend that it would stop flying the Nigerian route due to difficulties in retrieving its ticket proceeds in dollars.
Access Bank said in a notice it would limit the amount of dollars it can sell to individuals in payments abroad and that it would now take longer to fill requests.
